Retainage and Holdback: Tracking Both Directions
A plain-English brief on how retainage works under Ontario's Construction Act, why spreadsheet tracking loses real money, and what native retainage tracking looks like in a modern ERP.
What you'll learn
- How the 10% statutory holdback actually flows through a job
- Both directions: what is held on you, and what you hold on subs
- Why release dates are where spreadsheet tracking fails
- What native retainage tracking looks like in practice
- Questions to ask about your own holdback exposure today
Retainage is earned money with a delay attached. If nobody tracks the release date, nobody invoices for it.
What's inside
Bill $100,000 on a typical Ontario job and 10% is held back by default under the Construction Act. You collect $90,000, and the remaining $10,000 waits: per job, per contract, sometimes for a year or more.
Multiply that by every open job and retainage is often one of the largest receivables a contractor carries. It is also, in many back offices, the least tracked.
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Why spreadsheets lose this money
Retainage tracking fails at the handoffs. The amount held is calculated at billing time, recorded in one spreadsheet, and then nothing happens for months. The person who built the tracker moves on, the job closes, and the release date arrives with nobody watching for it.
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It runs in both directions
Owners hold retainage on you, and you hold retainage on your subcontractors. Both sides need tracking, because both sides carry risk.
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What native tracking looks like
In a construction ERP, retainage is not a side calculation. It is a property of the billing itself. Each progress bill records what was billed, held, and released, per job and per contract, and the numbers flow to the GL without re-keying.
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Three questions to ask this week
What is our total retainage receivable right now, across all open jobs? If the answer takes more than a few minutes, that is the finding.
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